Correlation Between Bitfarms and KING PHARMACEUTICALS

Can any of the company-specific risk be diversified away by investing in both Bitfarms and KING PHARMACEUTICALS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bitfarms and KING PHARMACEUTICALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bitfarms and KING PHARMACEUTICALS INC, you can compare the effects of market volatilities on Bitfarms and KING PHARMACEUTICALS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bitfarms with a short position of KING PHARMACEUTICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitfarms and KING PHARMACEUTICALS.

Diversification Opportunities for Bitfarms and KING PHARMACEUTICALS

-0.1

Correlation Coefficient

Bitfarms  KING PHARMACEUTICALS

Good diversification

The 3 months correlation between Bitfarms and KING is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bitfarms and KING PHARMACEUTICALS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KING PHARMACEUTICALS INC and Bitfarms is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bitfarms are associated (or correlated) with KING PHARMACEUTICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KING PHARMACEUTICALS INC has no effect on the direction of Bitfarms i.e., Bitfarms and KING PHARMACEUTICALS go up and down completely randomly.

Pair Corralation between Bitfarms and KING PHARMACEUTICALS

Given the investment horizon of 90 days Bitfarms is expected to generate 0.65 times more return on investment than KING PHARMACEUTICALS. However, Bitfarms is 1.55 times less risky than KING PHARMACEUTICALS. It trades about 0.08 of its potential returns per unit of risk. KING PHARMACEUTICALS INC is currently generating about 0.04 per unit of risk. If you would invest  97.00  in Bitfarms on May 5, 2025 and sell it today you would earn a total of  19.00  from holding Bitfarms or generate 19.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bitfarms  vs.  KING PHARMACEUTICALS INC

Bitfarms

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bitfarms are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Bitfarms reported solid returns over the last few months and may actually be approaching a breakup point.

KING PHARMACEUTICALS INC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KING PHARMACEUTICALS INC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, KING PHARMACEUTICALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bitfarms and KING PHARMACEUTICALS

The main advantage of trading using opposite Bitfarms and KING PHARMACEUTICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitfarms position performs unexpectedly, KING PHARMACEUTICALS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in KING PHARMACEUTICALS will offset losses from the drop in KING PHARMACEUTICALS's long position.

The idea behind Bitfarms and KING PHARMACEUTICALS INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.